MONBAT ECONOMIC GROUP PROGRESSIVE VALUE CREATION

Transcription

1 MONBAT ECONOMIC GROUP PROGRESSIVE VALUE CREATION

2 BUSINESS MODEL Monbat Group at a Glance CORE BATTERIES BUSINESS Lead Recycling Battery Production Monbat Recycling S.R.L. 100% owned (Public company on the BSE) Monbat AD 100% owned Monbat Recycling EAD 100% owned Monbat PLC DOO 100% owned Inđija Serbia Romania Bucharest Montana Dobrich Start AD 87% owned Godech Bulgaria Other Activities Octa Light AD 51% owned

3 Production Inventory Management management Recycling Fully Vertically Integrated Business 1 Collection of Scrap Batteries 2 Recycling 5 Waste Material a Lead purchased on LME 3 Lead Inventory Management Process Impact on Monbat's Operating Margins b Lead sold on LME Scrap battery procurement and stock insulate Monbat from negative impact of tight lead supply market pricing peaks 4 Battery Production Trading Management of recycled lead vs. purchased lead to optimise raw material input cost Further margin optimisation via sales into lead market Efficient manufacturing yield from in-house recycling of process waste material Aftermarket Commercials Industrial

4 Company History Since its inception, Monbat has transitioned from a small state-owned enterprise into a global player in the lead-acid battery market Company inception and transition into private sector Establishment of manufacturing plants Privatisation of the Company Monbat Plant established in Montana, Bulgaria, under state ownership Start Plant established in Dobrich. The facility begins production of lead-acid mainly for export to AvtoVaz in Russia The Company is established under the AKUMIKAR AD name and headquartered in Mihailovgrad AKUMIKAR AD changes its name to Monbat AD and becomes a private company under Prista Oil EAD s majority ownership Development of integrated manufacturing Added recycling capability Product diversification The Company completes its first installation for recycling of used lead-acid in Bulgaria Monbat begins production of Absorbent Glass Mat (AGM) in Montana The Company increases its capital from BGN0.8m to BGN14.8m through an issuance of 1.4m registered voting shares and further to BGN19.5m through an issuance of 4.7m dematerialised shares Building a pan-european presence IPO and Company consolidation Rapid growth Product diversification Implementation of a modernisation program 2006 Monbat AD successfully completes an Initial Public Offering (IPO) on the Bulgarian Stock Exchange in Sofia 2007 Start AD, a manufacturer of starter for commercial vehicles, becomes a member of the Monbat AD Group of Companies 2008 The Company allocates its 2007 profit to increase the share capital from BGN19.5m to BGN39m 2010 Monbat exceeds 100m in revenue for the first time since the Company s establishment. The recycling facility in Serbia is opened 2011 The recycling facility in Romania is opened. Monbat initiates a 23.4m five year capacity expansion program of all its facilities Capex spending on the capacity expansion program amounts to 4.5m including 1.1m on recycling facilities 2013 Monbat completes further 4.4m investment as part of its capacity expansion program 2014 The Company spends an additional 5.5m in Capex for the new punching technology. In late 2014, Monbat initiates a Fit for Future modernisation program encompassing large scope of activities aimed at improving operational efficiency 4

5 Vertical Integration Levers NATURAL HEDGING AND MASS MATERIAL BALANCE ARE DRIVING MARGIN OPTIMISATION IN CASE OF THE TWO EXTREME MARKET CONDITIONS Quantity of LME is low LME is high Supply of used Margin is optimized in the Recycling Division Time to price Indexation LME LME + - Recycling margin + - Weighted average CoGS of inventory + - Margin is optimized in the Finished Goods Division Demand for used Finished Goods Margin + +/- Scrap /Raw Lead stock re-build + -/+ Supply constraint Excess supply LME Price of Lead In Low LME Market context, Monbat is aiming to minimize the market spread hit on its integrated margin. In High LME Market context, Monbat is aiming to maximize the margin from the market spread.

6 Recycling Contributes Significantly to Total Gross Profit Through its recycling operations, Monbat generates superior gross profitability when compared to its peers Gross profit breakdown 2015A ( m) (1.4 ) Starter Stationary Semi-traction Bonus and claims Battery gross Lead recycling to Internal recycling Other gross profit Total gross profit on sales profit third parties Gross profit - peers % (GM 2015) Gross margin share (%) 2015A 13.8 % 3.4 % 1.8% (1.1%) 17.9% 0.4% 6.9% 1.0% 26.2% (GM 2015)

7 Monbat Gross Profit and EBITDA Outperform Industry Peers Mean 13.9% Median 10.0% 2,1% 4,7% 5,7% 6,7% 8,8% 8,9% 11,2% Furukawa AtlasBX GS Yuasa Thai Storage 13,8% 19,5% 20,6% Sebang Dry Cell Kung Long Mutlu Exide E. Schnapp 5 year revenue CAGR Median Revenue CAGR (%) 30,4% Nipress 34,4% Atlas Battery 12,8% Monbat LTM Gross Margin (%) Mean 21.0% Median 20.4% 12,8% Atlas Battery 17,2% 17,4% 18,1% 18,7% 19,1% 21,7% 22,4% 24,4% 24,8% 24,8% Nipress Sebang Dry Cell Kung Long AtlasBX GS Yuasa Furukawa Thai Storage E. Schnapp Mutlu 32,0% 29,5% Exide Gross Margin (LTM) Median LTM EBITDA Margin (%) Mean 11.5% Median 11.7% 7,2% 7,4% 9,4% 9,6% 10,1% 11,1% 12,3% 13,5% 13,8% 14,2% 14,5% 15,3% 18,8% Furukawa Dry Cell GS Yuasa Atlas Battery Thai Storage Sebang Nipress AtlasBX Exide E. Schnapp Kung Long Mutlu Monbat Source: Capital IQ, Company Data EBITDA Margin (LTM) Median

8 PROGRESSIVE VALUE GROWTH What Has Been Achieved till : 11,6% Delta: +4,7%, 43% ROE 15,6% 2012: 95,9 m EUR Delta: +69 m EUR, 72% MARKET CAPITALISATION 165m EUR CORPORATE WEALTH : 7,5 m EUR Delta:+ 8,1m EUR, 121% NET INCOME 14,9m EUR EBITDA 24,6m EUR 2012:0.19 EUR Delta: EUR, 121% EQUITY EPS 0, : 15,4 m EUR Delta: +8,8 m EUR, 57% Starting point 4,0 BGN ,8 BGN 6,4 BGN 8,4 BGN 7,9 BGN 7,8 BGN 4,3 BGN 8,3 BGN 100% Reached market cap of 165m EUR, representing 72% increase to baseline (2012) 2016E EBITDA of 24,6m EUR vs 16,9m EUR (2011) Maintained a healthy 18% EBITDA profitability ratio Employment growth of 24% reaching an employment level of 745 FTEs 2013 National Award Employer of the Year 3 rd Place, Enhanced Social Package in conformity with Eurobat standards 5 th consecutive times Award for Corporate Governance, Capital Forum Award of the Bulgarian Stock Exchange on Corporate Management and Governance of a listed company, awarded only once.